Walgreen CFO sees sales 'uplift,' lower costs with new format

Walgreen Co., the biggest U.S. drugstore chain, said its new store format is bringing an "uplift" in sales and helping drive down costs.

Walgreen will have the new layout, which features lower shelves and fewer items, in place at 3,000 locations by the end of this year, up from 30 last year, according to Chief Financial Officer Wade D. Miquelon. Six hundred of the Deerfield-based company's more than 7,100 stores have the new format now.

"The early signs are good," Miquelon, 45, said in a telephone interview on Feb. 1. He declined to specify by how much sales have improved.

The retailer is using the new format to focus more on everyday products such as food, skin care and cosmetics, and is introducing beer and wine at some locations. Sales at stores open at least a year declined 1.1 percent in January.

Better inventory controls are curbing costs, Miquelon said.

Steven Shubitz, a Des Peres, Missouri-based analyst with Edward Jones & Co., said "there wasn't a lot of dramatic change" in design at the revamped store he visited in Chicago.

"There's a lot of disbelief out there with investors about whether the new store format will provide any meaningful improvement in sales," said Shubitz. "The changes haven't shown up in results." He recommends buying Walgreen stock.

Beer and wine sales will probably bring in more customers than the redesign, Shubitz said.

Walgreen fell 44 cents, or 1.3 percent, to $33.01 at 2:11 p.m. in New York Stock Exchange composite trading. The shares declined 8.9 percent this year before today.